BCG Report on Cloud Adoption in Indian Industry

Windows Azure Industry "Givebacks"

October 14, 2010

1 Azure Indian Market Industry Givebacks 09302010.ppt

Information Technology enabled Services (ITeS) IaaS/PaaS allows firms to quickly delivery diverse services and improve quality

Industry pain points addressed by

IaaS/PaaS

Agility: need to quickly provision are re-provision

environments for teams working across multiple clients

Global reach: need to deliver reliable IT services to

employees and customers around the world

Security: need to control data security according to

contractually obligations with individual clients

Scalability: need ability to scale quickly (up and down)

as workloads change

Speed: need to reduce time to market

Adoption trends /

examples

ITeS / BPO has been one

of the first industries to

experiment with public

cloud IaaS & PaaS

adoption in India

However, the majority of

public cloud adoption has

been in focused trials with

non-mission critical

applications:

• PaaS for an internal

coding competition

• Proof of concept for

telecom client,

application requiring

large temporary use of

compute and storage

• Internal data backup and

disaster recovery

• PaaS for a web

application used to

calculate and report

infrastructure carbon

emissions

Industry priorities driving cloud adoption

Firms looking to climb value chain, growth drivers aligned

with benefits of IaaS/PaaS

• Increasing global reach: need global delivery and quality

process to ensure service quality and continuous

improvement

• Increasing competition in BPO: competition from other

emerging economies requires Indian firms to continue to

innovate and improve services

• Cost pressures: firms looking to grow and reduce cost as

competition increases driving down margins on

commoditized services

– Growing geographically within India to tier 2 and even

3-4 cities to keep labor cost low

– Historic over-investment in infrastructure, firms looking

to increase utilization of existing investments

• Niche: firms specializing to address industry specific needs

like healthcare and R&D

Cloud value drivers

• Improved collaboration with customers and employees

around the globe

• Reduced time to market for new products and services

• Reliability and availability

• Scalability

Top workloads w/ cloud potential

• Customer engagement management: provisioning

client specific images and work platforms

• CRM & knowledge management

• Service quality management: call monitoring and

storage, issue resolution and escalation

• Data warehousing and storage: many firms

currently using NAS, could move to IaaS/PaaS

storage

• Disaster recovery / business continuity: large

expenditures (10-12% total IT spend)

• Training & reviews: providing web-based advanced

skill training and employee appraisals


Independent Software Vendors (ISVs) IaaS/PaaS provide low cost platform for developing and delivering SaaS applications


IaaS/PaaS

Competition: ISVs facing global competition

for local market

Global reach: export focused firms already

developing software for global firms, offering

SaaS would be move up value chain

Platform interoperability: need ability to

deploy in multiple environments to meet the

needs of end customers

Client IP protection: need central control

over developer access to client owned code

Agility: pace of innovation and competition

rewards products brought to market quickly

Adoption trends /

examples

Firms seeing the value of

IaaS/PaaS in providing an

improved end user

experience, in particular

when serving global

customers

Examples of ISVs

adopting IaaS/PaaS:

• e-Government solution

built on PaaS, allowing

customers to implement

unique instance without

new infrastructure/staff

• Moved internal email,

backup and staging to

IaaS hosted environment

• Deployed custom

application on IaaS

platform for client

• Call center software

developer moved

application to PaaS in

order to provide SaaS

Industry priorities driving cloud

adoption

Software developers in India are looking for

ways to provide higher value services to

customers while reducing costs

• IaaS/PaaS allows smaller and regional firms

to reach global customers at significantly

lower costs

• A growing number of ISVs / SaaS firms are

developing applications for customers to be

deployed on customer servers and public

cloud environments

Strong presence of ITeS firms and MNC

captive centers driving an increase in the

talent pool and number of ISV startups

• Trend also driving competition for IT

infrastructure talent raising cost for self

hosting

SaaS becoming the method of choice for

software acquisition, especially in the SMB

segment where IT penetration is low

• SaaS aligned with business economics

• Local market nascent; ~ $23M in revenue,

however, strong growth expected at a 50%

CAGR, reaching over $180M by 2013

• Offerings from MNCs lack localization

Cloud value drivers

• Ensures customers of infrastructure

robustness with co-branding: "powered

by Windows Azure"

• Provides instant global infrastructure

• Reduces time to market for new products

and services


Telecommunications IaaS/PaaS solutions offer advantages but must work with tightly integrated application stack


IaaS/PaaS

Cost: need to keep costs of service delivery

low to match low and declining ARPU

Scalability: need ability to handle massive

amounts of data and processing as customer

base/usage grows and 3G technologies roll

out

Security: need to keep up with regulatory

changes; in particular, handling of customer

data (e.g. location)

Agility: need to reduce time to market for

new applications/services to drive data use

and increase willingness to pay

Adoption trends /

examples

Firms already accustomed

to sharing infrastructure

(e.g. leasing / shared cell

towers) to keep cost low,

however, limited public

cloud adoption to-date

Potential to disrupt IT svcs

industry by offering cloud

computing svcs:

• Offering IT-as-a-Service

(ITaaS), with end-to-end

infrastructure and

software delivered as a

service (NetPC based)

• IaaS based hosting

• Hosted versions of apps

delivered as SaaS

Examples of Telecoms

adopting IaaS/PaaS:

• European telecom using

PaaS to develop new

applications for linking

smart meters


adoption

Fierce competition in telecom market with

local and international firms vying for

customers with low cost offerings

• Changing regulation (e.g. MNP)

• Push to increase service in rural areas

• Growing congestion concerns and need to

increase quality of services

IT systems need to handle significant data

growth, while cutting cost due to low /

declining ARPU;

• 3G networks rolling out now

• Telecoms looking to develop and nurture

applications that drive data usage

–Entertainment (gaming, music, etc)

–Messaging

–Banking and payments

Many telecom firms already outsource IT

infrastructure, looking for approaches that

allow tight integration with current systems

• High infrastructure and application

complexity

• Interconnected systems

• Customer facing applications

Cloud value drivers

• Cost reduction

• Reduced time to market for new

products and services

• Increased elasticity & agility

• Scalability


Manufacturing Vertical specific apps and hybrid public/private clouds can help firms grow while reducing costs


IaaS/PaaS

Global competition: need to source supplies

and complete with global firms as well as

other emerging markets

Increased collaboration: increasing

collaboration with suppliers, customers and

partners (e.g. design, supply chain) as well as

backward and forward integration

Digitization of distribution: customers

moving online to find information about

products (buying still not widespread)

Reduced CapEx: allowing firms to increase

capabilities without large capital expenditure

Adoption trends /

examples

Due to perceived pain

points; core apps may not

move to entirely to public

IaaS/PaaS

• Security / privacy

• Reliability, especially in

tier 2, 3 & 4 cities

Increased integration and

collaboration needs will

create hybrid IaaS/PaaS

demand

Examples of

manufacturers adopting

IaaS/PaaS:

• Large Asian auto

manufacturer using PaaS

for deploying US website

for marketing campaign

• Manufacturing services

firm using PaaS to host

energy tracking

application and store

large amounts of data


adoption

The Indian manufacturing sector is poised

to grow significantly due to low labor costs

and the large domestic market

IT a likely lever to increase sector

productivity

• Customer / market facing applications:

the internet is becoming a stronger

distribution channel with firms looking to

build their brands and increase reach

• Internal collaboration: large, vertically

integrated firms can leverage IT to connect

employees and increase productivity

• Supply chain optimization: improved

systems necessary for integrating with

global partners as outsourcing increases

• Predicting demand: firms looking to

leverage data and better understand

changes in customer demand

Global slow down tightened access to

capital, causing firms to look for ways to do

more with less

• IaaS/PaaS reduces capital investment and

paves way for increased process and

system digitization

Cloud value drivers

• Improved collaboration with customers

and employees around the globe



• Cost reduction


Media and Entertainment IaaS/PaaS reduces barriers to digitization allowing converged creation / distribution of content


IaaS/PaaS

Rampant piracy: already a major concern,

however will be more important with move to

digital distribution

Low price points: need to match service

delivery cost with low willingness to pay for

digital content

Long production times: need to reduce time

for compute-intensive productions

• Expensive infrastructure necessary due to

need of sizing for peak use

Adoption trends /

examples

IT services spending

increasing as technology

use becomes strategic

• Digitization of content

creation and delivery

• Lack necessary IT skills

• Desire to focus on

creative / content

Examples of firms

adopting IaaS/PaaS:

• Indian animation firm

used cloud computing to

render feature length film

• Large US newspaper

developed content

management application

on PaaS, used for both

creation and delivery

• Media focused software

firm built application to

handle transcoding on

PaaS platform


adoption

Two mega-trends paving way for IaaS/PaaS

adoption

Convergence

• Traditional media (e.g. cinema, print)

converging into new media (e.g. internet,

mobile)

• Investments to increase new media content

underway

• Large investments in 3G underway that will

accelerate adoption

Digitalization of media

• >80% of content expected to be digitized by

2012; generating significant storage and

computing needs

• Media distribution platforms and networks

becoming key element of competitive

advantage as on-demand develops into a

major distribution channel

Indian entertainment content gaining global

attention; accelerating growth and the need

for global distribution

Cloud value drivers

• Reduction in piracy with web delivery

• Instant global infrastructure

• Scalability




Pharmaceuticals Workloads in R&D ripe for IaaS/PaaS adoption, however, regulatory and security issues remain


IaaS/PaaS

Need for massive On-demand computing

power: perform large, complex simulations

and analyses, computing needs continue to

grow as technology advances

Rising cost of discovery: looking for ways to

improve return on R&D

Data storage: research generates large

about of data to be securely stored (e.g.

genetic, bio, patient & chemical data)

Security: need to keep up with regulatory

changes; in particular, handling patient and

trial data

Adoption trends /

examples

Due to perceived pain

points; core apps may not

move entirely to public

IaaS/PaaS

• Security (privacy & IP

protection)

• Regulations (HIPPA, CFR

Part 11)

Examples of firms adopting

IaaS/PaaS:

• Global pharma firm using

cloud for collaboration with

internal and external users

• Biotechnology firm using

PaaS platform to analyze

enzymes and store large

amounts of research data

• Global pharma firm using

cloud based CRM for

gathering clinical

information in a hospital

setting


adoption

As the discovery of new compounds

becomes more expensive and time

consuming; firms looking for ways to

increase R&D productivity

• Cost reduction:

–Global firms outsourcing clinical trials

and R&D to India

– IaaS/PaaS allows scaling of

infrastructure to quickly serve R&D

needs while minimizing CapEx

• Improved targeting: using patient info

and bio data along with large-scale

computing power to improve targeting of

research for drug creation

–Advanced algorithms to search and

analyze multivariable effects on real

patient scenarios vs. small samples

–Cloud data warehouse of patient data

(e.g. genomics, pathology, historical

treatments)

• Streamlining management and

collection of data: IaaS/PaaS based

applications ease the burden of collecting

research and clinical trial data

Cloud value drivers

• Scalability



• CapEx reduction

Documents

BCG Report on Cloud Adoption in Indian Industry